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Abstract

A substantial fraction of children receiving Supplemental Security Income (SSI-child) benefits for disability apply to move directly onto the SSI-adult program without attempting to enter the labor market. Thus, most SSI-children are aging into what is likely to be a permanent life on the SSI-adult program or, in the event of denial of SSI-adult benefits, turning to other forms of social welfare. Once this transition is complete, very few seek employment while receiving SSI-adult or other benefits. This is costly to both the beneficiaries who live their lives at or near the poverty threshold and to taxpayers who are funding the benefits. The cost of providing such a low level of economic well-being to a growing number of young adults has raised concerns among policymakers and resulted in a large scale attempt by the Social Security Administration to support work among these young adults. There are many reasons why the vast majority of youths and young adults with disabilities are not investing in work. This project focuses on documenting evidence with respect to one of these barriers to work, the financial incentives to work for youth aging onto the SSI–adult program. Specifically, it produces a computation algorithm designed to determine the returns to work, including the value of wages and the eventual value of Social Security Disability Insurance benefits once the quarters of coverage requirement is met, for young adults receiving SSI–adult benefits. Using these algorithms it examines the financial incentives/disincentives of working for young adults on the SSI program.

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The research described in this report was prepared for the Social Security Administration and conducted by the Financial Literacy Center.

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